ET Now: Just put this entire move that has happened yesterday into perspective because there is talk of how all the direct sales tax benefits that would come into the airline company, should they start even if they are able to start importing the ATF would be nullified by the higher cost and the infra cost etc so on so forth. What do you make of the announcements that have happened yesterday?

Mahantesh Sabarad: Quite clearly, importing ATF by airlines whose primary business is providing service to passenger travellers, it is not their business to import ATF on their own. So quite clearly, I agree with the view that logistics cost creating infrastructure for handling ATF is something which is beyond the airlines and will negate any benefits that accrue to them due to reduction in sales tax. The government should have driven the policy in a simple manner, just brought the state governments onboard and got the oil companies onboard and hammered out the issue about the high taxes prevailing on ATF. That would have been a far simpler solution than a confrontation kind of attitude that the government has rolled out.

ET Now: What is the expectation of how much this may bring down operational cost back?

Mahantesh Sabarad: Talking specifically for the airlines, yes it does reduce the tax limit on ATF and hence reduces their cost but then what assumption that we are making here is that the ticket prices would not be reduced by the airlines. I do not think that is going to take place. Even assuming that they do import ATF in a way tax free, they will have to reduce ticket prices. That is what one can expect. So we do not think the gains will accrue to the airlines. And let me also point out that if I take Jet Airways versus the SpiceJet kind of thing, Jet is now a majorly international player, for all the fuel that they nod on to the aircrafts meant for international destinations that is actually tax free, that is state taxes free. So, almost 80% or 85% of the fuel that Jet would buy or purchase is actually out of the purview of the state taxes. So, they are in a way not going to be affected by any move to import ATF on their own. SpiceJet on the other hand is the exact reverse. They actually purchase a lot of fuel which is for domestic corporations only and then if they were to import ATF fuel, clearly they will get the benefit of lower taxes. So we have 2 different kind of airline perspectives here and like I already mentioned. I also expect that if ATF is ever imported, you will have ticket prices also adjusting lower.

ET Now: Since you brought up the specific names as well, while KFA has been talked about for long as having some financial problems, auditors of SpiceJet raised concerns regarding the company's ability to continue as a going concern due to net worth erosion, net worth slipping into the red. What have you made of the numbers and the auditor comments, what is the view going ahead, let's start with SpiceJet say?

Mahantesh Sabarad: For SpiceJet, the auditor comment, firstly it is not new, not something which is new. They made a similar comment in FY10 and mind you they have not qualified the account. So they have just merely drawn attention to the fact that it is a company which has net worth that has eroded. A similar comment existed in FY10. Thereafter the company has managed to raise its profitability, has managed to bring in certain amount of profits and they managed to bring in lot of equity capital firstly by conversion of all those FCCBs that were there with WL Ross. There were some warrant conversions with Goldman Sachs and there is now a fresh equity utilisation by the promoters, Marans. Effectively SpiceJet over this period has already taken actions to shore up its net worth and it is as recent as October when the new fund equity infusion has happened. So I am not worried in terms of the auditors' comment. It does not talk about the airlines. We have to also consider that the airline's ability to generate profits in future does exist today given the rapid strides it has been making in terms of its overall top line growth and market share gains. So I am not too worried about this comment.